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On July 14, 2016, the Federal Communications Commission released a Report Order and Further Notice of Proposed Rulemaking issuing service rules for four spectrum bands above 24 GHz. These bands are intended to be the future home for 5G wireless services and technologies currently being developed. The FCC’s new rules authorize mobile operations on a licensed basis in the 27.5-28.35 GHz, 38.6-40 GHz, and 37-38.6 GHz bands. The FCC also allocated the 64-71 GHz band for Part 15 use, which, when combined with the Part 15 57-64 GHz band will result in 14 GHz of spectrum for unlicensed operations such as WiGig service – approximately 15 times the amount of unlicensed spectrum available in all of the lower bands combined.

The massive amount of spectrum the FCC made available is newsworthy by itself. But perhaps just as important is the speed with which the FCC moved on its 5G spectrum item. Only 21 months ago the FCC commenced the 5G regulatory process by releasing a Notice of Inquiry seeking initial feedback on the future of 5G services. A year later, it issued a Notice of Proposed Rulemaking proposing to allocate spectrum and followed that in nine months with last week’s Report and Order. It was a very quick conclusion to a proceeding many initially projected would take several years. Because of its speed, the FCC established the United States as a world leader in spectrum availability for 5G services. To top it off, initial reactions to the Report and Order are overwhelmingly positive with both the wireless industry and consumer-focused public interest groups praising the FCC’s mix of licensed and unlicensed service rules.

In the Further Notice, the FCC sought comment on authorizing fixed and mobile service in several additional bands: 24.25-24.45 GHz, 24.75-25.25 GHz, 31.8-33 GHz, 42-42.5 GHz, the 47.2-50.2 GHz, 50.4-52.6 GHz, and the 71-76 GHz band together with the 81-86 GHz bands (70/80 GHz bands) and the bands above 95 GHz. The FCC proposed a three-tiered approach to licensing in the 70/80 GHz band similar to the rules recently adopted for the 3.5 GHz band. The proposed tiers are (1) Incumbent Access users, which would receive the highest level of protection; (2) Priority Access Licensees (PALs); and (3) General Authorized Access (GAA) users. Comments are due September 30 and Reply Comments are due October 31.

Commercial 5G services are not yet available. And, for its part, the FCC did not define what will constitute 5G. But the FCC has now established a sandbox within which industry can innovate. We’ll see what the future will bring.

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Last week, the FAA finalized its rules for routine commercial use of small unmanned aircraft systems (drones).  The new rules govern the operation and certification of small drones weighing less than 55 pounds for non-hobby and non-recreational purposes.  The rules will permit UAS operations for applications such as the delivery of consumer goods, inspections of cell phone towers, bridges, pipelines, electric lines, and oil rigs, crop monitoring, search and rescue missions, research and development, and aerial photography, to name a few.  The rules will become effective 60 days after publication in the Federal Register.  For more information, please see Keller and Heckman’s Consumer Protection Connection blog post on this topic or contact Greg Kunkle (kunkle@khlaw.com; 202.434.4178).

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Last week, the FCC released a Fact Sheet outlining a draft Report and Order and Further Notice of Proposed Rulemaking the Commission will vote on in July.  The proposal would make additional licensed spectrum available in the 28, 37 and 39 GHz bands.  It also would make 7 GHz of spectrum available for unlicensed use in the 64-71 GHz band.  Finally, the item proposes shared use of the 37-37.6 GHz band between commercial and federal users.  The Further Notice will consider additional rule changes that could increase access to various bands above 24 GHz, including 70 GHz (71-76 GHz) and 80 GHz (81-86 GHz) bands.  For more information, please contact Wes Wright (wright@khlaw.com; 202.434.4239).

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Last week was the annual Wireless Infrastructure Show put on by the industry association PCIA – The Wireless Infrastructure Association. The first announcement at the show was a new name for the association–the Wireless Infrastructure Association or WIA—with a new website at www.wia.org.  There is no change in the mission or priorities of the association, just dropping an outdated and confusing old acronym dating back to the 1990s.

There was excellent attendance, many keynote speeches, a record number of exhibitors, and a strong education program. I moderated a session on the Tribal Consultation Process with five subject matter experts as speakers. The panelists addressed issues in the current FCC process including sometimes slow response times from Tribal authorities, adequacy of resources for the Tribes to carry out reviews, and appropriateness of fees charged by reviewing authorities. The panel agreed that significant progress has been made on clearing sites for Positive Train Control, the deadline for which was recently extended.

At other panels, tower company CEOs and CFOs noted that the wireless infrastructure business is not booming right now as the cellular providers have mustered their capital for the FCC’s current television spectrum incentive auction but predicted that it will ramp up again within the next 18 months in the normal cycle of this business.

Next year’s Wireless Infrastructure Show will be held May 22-25 in Orlando, FL.

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This is the second entry in a series on the “Industrial Internet,” focusing on the basic elements, legal issues and procurement implications, principally from the perspective of the end user.

Distinctions between the Industrial Internet and consumer IoT are not hard and fast. For example, many consumer IoT applications are implemented through smartphone apps.  On the other hand, some operating systems and related applications are intended for industrial settings such as General Electric’s Predix (which, in turn, may be accessible through smartphone/tablet based apps).  Telematics is one area in which the line between the Industrial Internet and consumer IoT is unrecognizable.  This entry looks to highlight several distinctions and areas of overlap.

Cyber Threats and Data Privacy.  Participants in the Industrial Internet are focused on insulating their “Industrial Intranets” from cyber threats and responding swiftly to cyberattacks. The consumer IoT focuses on personally identifiable information (PII) and other data collected from consumers that are subject to cyberattacks and other vulnerabilities.  The industrial sector is concerned with the Administration’s 2013 Executive Order—Improving Critical Infrastructure Cybersecurity, sharing cyber threat information without risk of litigation, and implementing industry-specific standards such as NERC Critical Infrastructure Protection (CIP) Cyber Security Reliability Standards.  In the context of the consumer IoT, protection of PII and other sensitive data is addressed under federal and state privacy, data security, and data breach notification laws and regulations, including sector-specific laws such as HIPPA, and industry guidelines.

Enhanced Analytics.  The Industrial Internet exists to acquire information from physical assets and implement real time response, make predictive judgements on wear and tear, adjust maintenance and replacement cycles, and to modify equipment design, materials or components based on increasingly sophisticated and powerful data processing capabilities.  This feedback will be implemented rapidly over the next several years as the software components of industrial machinery become more central to equipment design and operation.  Parallel developments in the consumer IoT are most apparent in the manufacture and maintenance of automobiles as car manufacturers send software updates to vehicles via wireless communications.  Presently, the consumer IoT is more focused on real time feedback (wearables) and operations such as app-based home security systems and smart thermostats; more in-depth analytics are on the horizon.

Industrial Intranets v. Consumer IoT — Communications.   The consumer IoT relies on unlicensed spectrum having varying propagation and coverage characteristics, commercial mobile service and, in most cases, backhaul via the public Internet to or from smart phones.  In some instances, consumer IoT applications may be routed from the mobile services provider to an entity’s MPLS port for delivery to its destination/data center.

Communications over Industrial Intranets are more diverse.  Critical infrastructure industry communications from the RF device to enhanced analytics resources may never traverse mobile wireless networks (but conveyed over privately licensed wireless networks), the public Internet or any carrier-provided service.  The challenge for critical infrastructure companies is that mobile broadband services and public Internet services are “best efforts” services.  SLAs for availability and latency, for example, are not offered.  Mobile services providers decline to set aside capacity to provide the wireless equivalents of private line or MPLS offerings.

In manufacturing and petrochemical facilities, communications to and from devices may be conveyed via fiber optic lines for on–premise, real- time review and response, and then  conveyed over carrier-provided services to the company’s enhanced analytics resources.  In other use cases, transport over the mobile broadband service is essential, such as data communications to and from farm machinery operating in fields or monitoring assets in transit.

Data Ownership.  Federal and state privacy laws presume that individuals own their on-line data that companies may collect. The myriad state and federal privacy laws dictate how online companies may acquire, use and share this data, and how this data must be secured, managed and discarded.  The questions of ownership and confidentiality of data generated on Industrial Intranets are more nuanced and will likely be a focal point for negotiations going forward.

Consider the operation of heavy equipment, such as jet engines or escalators used in rail commuter networks, such as the DC Metrorail system.  The escalator manufacturer and WMATA, respectively, have strong interests in acquiring the performance data of the Metrorail station escalators.  The “crunched data” could provide insights into whether recurring downtime events are attributable to improper or insufficient preventive maintenance; design, material or manufacture defects; or improper installation.  The data are important to the manufacturer (to implement changes in design or materials) and to end users (to implement changes in maintenance and for purchase decisions for replacement equipment).

A purchaser of capital equipment may also want to know how the performance of its equipment compares to the performance of the same or comparable equipment of other operators.  This “relative data” will indicate whether any significant maintenance/down time experienced by the operator are related to design, materials or manufacture defects or to operations or maintenance issues that the operator can address.  Over time, equipment warranties could be based on a given product’s performance relative to the performance of the same equipment sold to other companies.

 

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I had the pleasure of speaking at the first annual Wireless West Conference in Anaheim, CA on April 20. Wireless West was organized and managed by five state wireless associations—Arizona, California, Colorado, Nevada, and Northwest (which incorporates Oregon and Washington). 400 attendees sold out the event.

My panel was titled “Section 6409 vs. Reality” and we discussed experience in the application of Section 6409, the federal legislation that pre-empts local zoning of collocation of antennas and equipment on existing wireless sites under implementing rules of the Federal Communications Commission.  Our panel concluded that 6409 has broadly improved local action on collocation requests, but some jurisdictions are still evaluating the statute and its impact on their processes.  The panel noted that there are some instances where the detailed regulations adopted by the FCC are proving confusing for local governments.

Section 6409 became law in 2012 after a legislative campaign conducted by PCIA – The Wireless Infrastructure Association while I was the CEO of that association. The legislation was enacted because Congress decided that collocation was in the best interests of all parties. It enables existing wireless sites to serve more carriers and their customers. That has obvious economic benefit to the businesses involved and also alleviates some of the pressure on local governments to authorize more and more sites, which can be locally controversial.

Based on the success of this initial conference, Wireless West likely will be an annual event that we expect to grow in size and impact.

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This is the first entry in a series on the “Industrial Internet,” focusing on the basic elements, legal issues and procurement implications, principally from the perspective of the end user. The term is used to distinguish industrial and critical infrastructure applications from consumer “Internet of Things” applications, but similar concepts apply.

The unifying characteristic is that information on attributes of physical objects (or the human body with regard to wearables and medical telemetry) is acquired by sensors that digitize, analyze (to varying degrees) and transmit this data. Based on software programmed rules, the sensors may issue commands to actuators to change or modify the operation of physical assets.  Sometimes the data is simply displayed and stored locally. An important function of the Industrial Internet is that the data is almost always subject to more in-depth analysis.

In over-simplified terms, in the Industrial Internet information is acquired from physical assets (electric generators) or local environments (refrigerated trailers (“reefers”)), by sensors affixed to or embedded in physical assets to measure specific parameters such as vibrations, pressure or temperature. Sensors often consist of software, firmware and a CPU and are connected to an RF transceiver or to a fixed wireline network (local or wide area).

As digitized, the data from sensors (different sensors measure different physical attributes) are transmitted (via wireless or wireline connectivity) to a local gateway, collection point or node (“node’) that, based on programmed rules and the information received, may issue commands to actuators (switches or valves) to shut down or modify operation of the equipment, lower the temperature, adjust the humidity, or trigger alarms for management intervention. In time-critical applications, the sensors may communicate with other sensors to take specific action.

After initial processing and commands by sensors or nodes (“at the edge”), the data is conveyed (real-time or not) to a “backend” (data processing capability (cloud-based or not)) that may either issue commands to the actuators or perform more in-depth analysis or both. This analysis may suggest changes in the prognostics or other programmed rules in the sensors or nodes, in data sampling frequency, or in the maintenance, manufacture or operation of the physical assets.

Except in enclosed facilities (such as factories or electric substations), the sensors or the nodes are often connected by one or more wireless pathways.  The wireless data are typically routed to a wireline Internet connection, a MPLS port or a private network on to the backend.  Industrial Internet communications are typically encrypted.  Advances in operating system software and miniaturization (to accommodate local processing and issuance of commands by the sensors), IP connectivity, data management software, and “big data” processing capabilities enable the Industrial Internet.

The term “Industrial Internet” is something of a misnomer.  An entity’s physical assets, its use of sensors (and nodes), and encrypted connectivity to the backend are typically a company-specific operation, not intended to be widely accessible.  Thus, these networks may better be referred to as “Industrial Intranets.”

Footnote:  This series is not focused on computer-controlled equipment, processes or technologies, such as robotics, used to produce refined products and chemicals, industrial equipment and consumer goods, collectively referred to as Industrial Control System (“ICS”) technologies.  Auto assembly plants, refineries and soft drink bottling plants utilize ICS technologies.

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Another marker passed on the FirstNet roadmap last week as Capability Statements from bidders interested in building, operating and maintaining the Nationwide Public Safety Broadband Network were submitted March 31, 2016. Final bids are due in less than two months, on or before May 13, 2016.

FirstNet has clarified that submission of a Capability Statement is not a prerequisite to submission of a bid. However, it is unlikely that any serious bidder would choose not to take advantage of the Capability Statement process, which is designed to provide feedback from FirstNet prior to the submission of a nationwide bid.

The significant interest generated by its Request For Proposal (“RFP”) prompted FirstNet to extend the initial due dates for the Capability Statements and the bid submissions. FirstNet received over 400 questions seeking clarification of various parts of the RFP.  In record speed, FirstNet provided answers to questions on a variety of topics including vendor payments, financial sustainability of the network, rural coverage requirements, priority access and state plans.

Perhaps the best indication of the interest generated by the RFP is the number of companies requesting inclusion on a partner/teaming list. This list identifies interested entities looking to be part of a nationwide bid, as suppliers of products, services, and/or facilities. Over 600 entities are listed, including integrators, cable TV companies, rural telecommunications providers, electric utilities and numerous consultants. While there is no guarantee these entities will be included in any nationwide bid, the large number of companies looking to participate underscores the high interest in the FirstNet opportunity.

Of course, the key to success is for a prime bidder to come forward with both the ability and the resources to meet all of FirstNet’s objectives for the network. From recent trade press reports it appears that FirstNet will receive a number of meaningful competing bids. Stay tuned.

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It is all-too-fitting that the annual USF report is due on April 1.  For many filers, OMB’s “Estimated Average Burden Hours Per Response” of 13.5 hours for completing the Form 499-A is laughable.  The FCC could substantially reduce USF reporting burdens by implementing a number of overdue changes.

Many process improvement proposals offered in comments filed in response to the FCC’s 2012 Further Notice of Proposed Rulemaking remain viable and doable.  These changes are independent of any FCC decision on whether, when or how to expand the base of USF-assessable revenues.  Here is a short list of USF reporting reforms the FCC should adopt.

1. Resolve appeals of USAC decisions consistent with the timelines in Section 54.724 of the FCC’s rules or revise the target dates for making decisions.

If the expert agency sits on its hands, inconsistent decisions by filers are inevitable.

2. Address USF contribution reporting questions through analogues to IRS Private Letter Rulings or      Revenue Rulings.

Determining USF contributions can be problematic because filers often must address the vexing question of whether a service is a telecommunications service or an information service.  Many of these questions remain unanswered for years. The FCC or the Wireline Competition Bureau is in the best position to answer these questions.

3. Balance the current asymmetrical periods for correcting USF reporting mistakes (5 years for underpayments and 1 year for refunds/adjustments for overpayments).

This is a no-brainer.

4. Limit adjustments to the USF contribution factor to once a year.

While USF contributions may not be “taxes,” it is noteworthy that state sales and use taxes typically are not adjusted quarterly.  This would be a “win-win” for filers and USAC.

5. Set “safe harbors” for determining interstate/international and intrastate traffic mixes for wireless and VoIP traffic that reasonably correspond to reported values.

Filers cannot be expected to remit USF contributions based on “safe harbors” that bear no relation toactual jurisdictional traffic mixes.  This would be another “win-win” for filers and USAC.

The FCC should also adopt a self-disclosure program to encourage non-filers and late-filers to register and report and remit USF contributions and all other regulatory payments.  Under this approach, the services provider would pay the amounts owed, a reasonable measure of “economic benefit” for late payment, and a realistic forfeiture amount.  Let’s maximize support for important programs and try to keep services providers in the game.  This is far better than the treble damages methodology outlined in the 2015 Forfeiture Policy Statement.

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Time is running short for schools and libraries to seek funding for eligible products and services in the 2016 E-Rate funding season. E-Rate provides funding for high speed Internet access, dedicated services, and dark fiber to schools and libraries, as well as premises-based WiFi deployments. The filing process is driven largely by schools and libraries (aka “Applicants”), many of which have already posted applications on the E-Rate Productivity Center (“EPC”) web site managed by the Universal Service Administrative Company (“USAC”). For 2016, schools and libraries have until April 29, 2016 to request discounts on eligible products and services.

Schools and libraries (“the Applicants”) initiate the bidding process by posting a Form 470 on the EPC web site, setting out entity information, services requested, technical contact information and procurement information. The filing window for Applicants to submit a Form 470 remains open until April 1. After posting a Form 470, Applicants must wait 28 days before selecting a service providers’ bid. Since the window for filing Forms 470 is now open, service providers should be accessing USAC’s Form 470 Search Tool or Form 470 Download Reports Tool to view bidding opportunities.

It is important for services providers to bid aggressively; low cost is the primary factor that Applicants must consider when selecting service providers. In addition to pricing, Applicants and prospective bidders should be mindful of the basic rules governing E-Rate bidding and funding. The FCC’s Enforcement Bureau has entered into numerous consent decrees with both service providers and Applicants, including state agencies, for alleged violations of the competitive bidding process.

When the school or library selects a winning bidder, the Applicant and winning bidder may work together to complete the filing process, which includes finalizing the FCC Form 471. Winning bidders must submit the Form 473 – the Service Provider Annual Certification (“SPAC”) Form—for the initial and subsequent funding years.  This form includes several certifications that service providers must attest to in order to participate in the program.

Prior to releasing funds, USAC must review and approve an Applicant’s Form 471. After approval, USAC will send the Applicant a Funding Commitment Decision Letter (“FCDL”) and notify the service provider that its bid has been approved. There is no set time for USAC to conclude its review of the Applicant’s filing. Some winning bids with extenuating circumstances from 2014 are just now receiving FCDLs.

Last but not least, the Applicant must file a Form 486 informing USAC that approved services have been initiated and that the Applicant is in compliance with the Children’s Internet Protection Act (“CIPA”). At this juncture, USAC will begin to pay submitted invoices.